1. Alternative Approaches to Healthcare Resource Allocation

2. Some Key Points Some Key Points  No healthcare system provides unlimited healthcare resources to all its users  The need for rationing or prioritization is generally considered to be axiomatic  Decisions about rationing or prioritization are made at a number of levels: 1.Healthcare vs. other services 2.Healthcare vs. healthcare 3.Different patient groups 4.Specific forms of treatment for each patient group 5.Prioritize between different patients 6.How much to invest in individual patients

3. Definitions of Terminology  Rationing and priority setting  7 mechanisms of rationing, by approaches to healthcare resource allocation (Parker 1996, Klein et al 1975): 1.Denial 2.Selection 3.Deflection 4.Deterrence 5.Delay 6.Dilution 7.Termination

4. Market-based Market-Based Healthcare Systems  Why not ration healthcare according to individual’s ability to pay? The components of market failure 1.Asymmetry of information 2.The inability of market to cope efficiently with the complexity and uncertainty raised by a potentially infinite number of healthcare problems 3.The possibility of emergence of monopoly supply 4.The existence of caring externalities

5. Market-based Market-Based Healthcare Systems (contd.)  Therefore, market-based healthcare systems depend on the availability of health insurance  Does the market health insurance in MBHS devoid of deficiencies? NO! The deficiencies of health insurance in MBHS 1.Adverse selection 2.Moral hazard 3.High transaction costs 4.Input markets for medical care are not competitive 5.Equity considerations

6. Market-based Market-Based Healthcare Systems (contd.)  What can we infer from these observation and arguments? All societies need to intervene, to varying degrees, to insure that healthcare is not solely rationed by the ability of individuals to pay for health insurance For example, see table 1. table 1 table 1

7. Market-based Publicly Funded Healthcare Systems  Allocating resources by ‘need’ or capacity to benefit  Underlying notion: Healthcare should be allocated on an equitable basis according to the ‘needs’ of the population Underlying problem: ‘Need’ is a potentially vague term

8. Market-based Publicly Funded Healthcare Systems (contd.)  Allocating resources by ‘need’ or capacity to benefit (contd.)  2 broad approaches to allocating healthcare resources on the basis of ‘need’ (Coast et al 1996):  Allocation according to the general burden of disease in the population  Allocation on the basis of epidemiological examination of the distribution of particular diseases (needs assessment)

9. Publicly Funded Healthcare Systems (contd.)  Allocating resources by ‘need’ or capacity to benefit (contd.) Critical steps involved in needs assessment: 1.A clear statement of the population group whose health needs are to be assessed 2.Identification of the subcategories with particular services for each subcategory 3.Estimation of the prevalence and incidence of each subcategory 4.Setting out the current services for each subcategory 5.Identifications of the clinical effectiveness and cost effectiveness of interventions 6.Setting out a model of care appropriating relative priorities to different interventions and recipients

10. Publicly Funded Healthcare Systems (contd.)  Allocating resources using economic approaches  Cost / Consequence Analyses: 1.Cost Minimization Analysis 2.Cost / Effectiveness Analysis 3.Cost / Utility Analysis 4.Cost / Benefit Analysis

11. Publicly Funded Healthcare Systems (contd.)  Allocating resources by age oCallaghan (1988): Rather than focus on the extension of life, focus on the enhancing the quality of life oDaniel (1988): Emphasis placed on increasing the opportunity of enjoying a ‘normal’ lifespan oGrimley Evans (1991): Physiological status, rather than age, is the main predictor of health outcomes

12. Publicly Funded Healthcare Systems (contd.)  Allocating resources through pluralistic bargaining oDebate and bargaining oAll the bargainers at the table with their objectives oWho are the appropriate participants; the weight that should be given to each opinion; the criteria by which the decisions are made oHow to translate broad decisions (macro) into clinical (micro) level

13. The Way Forward  Allocating finite healthcare resources; 2 broad approaches: 1.Implicit rationing or priority setting 2.Explicitness or transparency in resource allocation